Shanghai (Gasgoo)- BYD announced on June 25 that it plans to offer loans to its subsidiaries with raised funds, in order to carry out a R&D project of new-energy vehicles (NEV). By virtue of the NEV R&D project, BYD expects to release model products that better meet market demands, as well as customers' diversified demands.
In accordance with the fundraising plan released by BYD in July, 2016, the total raised funds would reach RMB 14.473 billion. Specifically, BYD authorizes its subsidiary Shenzhen BYD Lithium Battery Co., Ltd. to utilize RMB 6 billion in the production capacity expansion project of lithium-iron phosphate battery. BYD also plans to invest RMB 5 billion in the NEV R&D project and authorizes BYD Auto Industry Co., Ltd. (BYD Auto Industry) to conduct the project.
Since BYD has authorized two additional subsidiaries, BYD Auto Co., Ltd. (BYD Auto) and Changsha BYD Auto Co., Ltd. (Changsha BYD) to conduct the NEV R&D project, BYD Auto Industry will offer loans to the abovementioned two subsidiaries. Specifically, BYD Auto will gain a loan of no more than RMB 700 million, while Changsha BYD no more than RMB 150 million.
BYD stated that the NEV R&D project is a R&D project that will not generate profits directly. The move that BYD uses raised funds to offer loans to its subsidiaries will help improve utilization efficiency of raised funds and also can help BYD to adapt to the ever-changing auto industry market. Capitalizing on the NEV R&D project, the company can further enrich its product portfolio and expand market shares, thus enhance the company's core competitiveness.
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